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Full-Text Articles in Law

The Coase Theorem And Arthur Cecil Pigou, Herbert J. Hovenkamp Dec 2008

The Coase Theorem And Arthur Cecil Pigou, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

In "The Problem of Social Cost" Ronald Coase was highly critical of the work of Cambridge University Economics Professor Arthur Cecil Pigou, presenting him as a radical government interventionist. In later work Coase's critique of Pigou became even more strident. In fact, however, Pigou's Economics of Welfare created the basic model and many of the tools that Coase's later work employed. Much of what we today characterize as the "Coase Theorem," including the relevance of transaction costs, externalities, and bilateral monopoly, was either stated or anticipated in Pigou's work. Further, Coase's extreme faith in private ...


Government Clubs: Theory And Evidence From Voluntary Environmental Programs, Cary Coglianese, Jennifer Nash Dec 2008

Government Clubs: Theory And Evidence From Voluntary Environmental Programs, Cary Coglianese, Jennifer Nash

Faculty Scholarship at Penn Law

The U.S. Environmental Protection Agency (EPA) has established numerous voluntary environmental programs over the last fifteen years, seeking to encourage businesses to make environmental progress beyond what current law requires them to achieve. EPA aims to induce beyond-compliance behavior by offering various forms of recognition and rewards, including relief from otherwise applicable environmental regulations. Despite EPA's emphasis on voluntary programs,relatively few businesses have availed themselves of these programs -- and paradoxically, the programs that offer the most significant regulatory benefits tend to have the fewest members. We explain this paradox by focusing on (a) how programs'membership screening ...


The Enduring Lessons Of The Breakup Of At&T: A Twenty-Five Year Retrospective, Christopher S. Yoo Dec 2008

The Enduring Lessons Of The Breakup Of At&T: A Twenty-Five Year Retrospective, Christopher S. Yoo

Faculty Scholarship at Penn Law

On April 18-19, 2008, the University of Pennsylvania Law School hosted a landmark conference on “The Enduring Lessons of the Breakup of AT&T: A Twenty-Five Year Retrospective.” This conference was the first major event for Penn’s newly established Center for Technology, Innovation, and Competition, a research institute committed to promoting basic research into foundational frameworks that will shape the way policymakers think about technology-related issues in the future. The breakup of AT&T represents an ideal starting point for reexamining the major themes of telecommunications policy that have emerged over the past quarter century. The conference featured a ...


Judicial Fact-Finding At Sentencing, Stephanos Bibas Dec 2008

Judicial Fact-Finding At Sentencing, Stephanos Bibas

Faculty Scholarship at Penn Law

This encyclopedia entry summarizes the pendulum-swings that led the Supreme Court in Apprendi v. New Jersey, Blakely v. Washington, and United States v. Booker to limit judges' ability to find facts at sentencing. Paradoxically, the much-criticized Federal Sentencing Guidelines have survived; a line of cases that began as an effort to restore juries' role has turned into a guarantor of judicial discretion; and the doctrine has quickly moved far from its Sixth Amendment roots to a policy balancing test. The Court could instead have pursued a different, more fruitful path. The Court did not have to force sentencing factors into ...


Toward A Unified Theory Of Access To Local Telephone Systems, Daniel F. Spulber, Christopher S. Yoo Dec 2008

Toward A Unified Theory Of Access To Local Telephone Systems, Daniel F. Spulber, Christopher S. Yoo

Faculty Scholarship at Penn Law

One of the most distinctive developments in telecommunications policy over the past few decades has been the increasingly broad array of access requirements regulatory authorities have imposed on local telephone providers. In so doing, policymakers did not fully consider whether the justifications for regulating telecommunications remained valid. They also allowed each access regime to be governed by its own pricing methodology and set access prices in a way that treated each network component as if it existed in isolation. The result was a regulatory regime that was internally inconsistent, vulnerable to regulatory arbitrage, and unable to capture the interactions among ...


The Taxation Of Private Equity Carried Interests: Estimating The Revenue Effects Of Taxing Profit Interests As Ordinary Income, Michael S. Knoll Nov 2008

The Taxation Of Private Equity Carried Interests: Estimating The Revenue Effects Of Taxing Profit Interests As Ordinary Income, Michael S. Knoll

Faculty Scholarship at Penn Law

In this Article, I estimate the tax revenue effects of taxing private equity carried interests as ordinary income rather than as long-term capital gain as under current law. Under reasonable assumptions, I conclude that the expected present value of additional tax collections would be between 1 percent and 1.5 percent of capital invested in private equity funds, or between $2 billion and $3 billion a year. That estimate, however, makes no allowance for changes in the structure of such funds or the composition of the partnerships, which might substantially reduce tax revenues below those estimates.


Exacerbating Injustice, Stephanos Bibas Nov 2008

Exacerbating Injustice, Stephanos Bibas

Faculty Scholarship at Penn Law

This brief essay responds to Josh Bowers' argument that criminal procedure should openly allow innocent defendants to plead guilty as a legal fiction. Though most scholars emphasize the few but salient serious felony cases, Bowers is right to refocus attention on misdemeanors and violations, which are far more numerous. And though the phrase wrongful convictions conjures up images of punishing upstanding citizens, Bowers is also right to emphasize that recidivists are far more likely to suffer wrongful suspicion and conviction. Bowers' mistake is to treat the criminal justice system as simply a means of satisfying defendants' preferences and choices. This ...


Torts And Innovation, Gideon Parchomovsky, Alex Stein Oct 2008

Torts And Innovation, Gideon Parchomovsky, Alex Stein

Faculty Scholarship at Penn Law

This Essay exposes and analyzes a hitherto overlooked cost of the current design of tort law: its adverse effect on innovation. Tort liability for negligence, defective products, and medical malpractice is determined by reference to custom. We demonstrate that courts’ reliance on custom and conventional technologies as the benchmark of liability chills innovation and distorts its path. Specifically, the recourse to custom taxes innovators and subsidizes replicators of conventional technologies. We explore the causes and consequences of this phenomenon and propose two possible ways to modify tort law in order to make it more welcoming to innovation.


Schumpeterian Competition And Antitrust, Herbert J. Hovenkamp Oct 2008

Schumpeterian Competition And Antitrust, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

Joseph Schumpeter's vision of competition saw it as a destructive process in which effort, assets and fortunes were continuously destroyed by innovation. One possible implication is that antitrust's attention on short-run price and output issues is myopic: what seems at first glance to be a monopolistic exclusionary practice might really be an innovative enterprise with enormous payoffs in the long run. While this may be the case, three qualifications are critical. First, one must not confuse the prospect of innovation with the scope of the intellectual property laws; their excesses and special interest capture cast serious doubt on ...


Evaluating The Social Effects Of Environmental Leadership Programs, Jonathan C. Borck, Cary Coglianese, Jennifer Nash Oct 2008

Evaluating The Social Effects Of Environmental Leadership Programs, Jonathan C. Borck, Cary Coglianese, Jennifer Nash

Faculty Scholarship at Penn Law

In the past decade, EPA and over 20 states have created voluntary environmental leadership programs designed to recognize and reward businesses that take steps that go beyond compliance with the strictures of environmental law. Environmental leadership programs seek not only to spur direct improvements to environment quality but also to advance broader social goals that may lead indirectly to environmental improvements, such as improving business-government relationships and changing business culture. Measuring progress toward leadership programs’ social goals is a particularly challenging but essential task if researchers and decision makers are to understand the full impacts of these programs. In this ...


The Freedom Of Information Act And The Ecology Of Transparency, Seth F. Kreimer Sep 2008

The Freedom Of Information Act And The Ecology Of Transparency, Seth F. Kreimer

Faculty Scholarship at Penn Law

The Framers’ approbation of a unitary executive rested in important part on the belief that the unitary executive’s actions were apt to be more “narrowly watched and readily suspected” by an informed public opinion than those of a plural executive. Yet the body of the Constitution provides no right to public information. What the Constitutional text omits, the last generation has embedded as a part of modern constitutional practice in the Freedom of Information Act. Some critics have deplored FOIA as a “romantic” effort at “self help oversight”, superfluous in light of the checks and balances of divided government ...


Network Neutrality, Consumers, And Innovation, Christopher S. Yoo Aug 2008

Network Neutrality, Consumers, And Innovation, Christopher S. Yoo

Faculty Scholarship at Penn Law

In this Article, Professor Christopher Yoo directly engages claims that mandating network neutrality is essential to protect consumers and to promote innovation on the Internet. It begins by analyzing the forces that are placing pressure on the basic network architecture to evolve, such as the emergence of Internet video and peer-to-peer architectures and the increasing heterogeneity in business relationships and transmission technologies. It then draws on the insights of demand-side price discrimination (such as Ramsey pricing) and the two-sided markets, as well as the economics of product differentiation and congestion, to show how deviating from network neutrality can benefit consumers ...


International Competitiveness, Tax Incentives, And A New Argument For Tax Sparing: Preventing Double Taxation By Crediting Implicit Taxes, Michael S. Knoll Aug 2008

International Competitiveness, Tax Incentives, And A New Argument For Tax Sparing: Preventing Double Taxation By Crediting Implicit Taxes, Michael S. Knoll

Faculty Scholarship at Penn Law

Tax sparing occurs when a country with a worldwide tax system grants its citizens foreign tax credits for the taxes that they would have paid on income earned abroad, but that escapes taxation by virtue of foreign tax incentives. The supporters of tax sparing argue that it is a form of foreign aid, an obligation owed to developing countries, and a legitimate means of improving the competitiveness of resident investors. Tax sparing, however, has long been opposed by the United States on the grounds that it is an expensive and problematic concession to developing countries, inconsistent with basic and fundamental ...


The Immigration Paradox: Alien Workers And Distributive Justice, Howard F. Chang Jul 2008

The Immigration Paradox: Alien Workers And Distributive Justice, Howard F. Chang

Faculty Scholarship at Penn Law

The immigration of relatively unskilled workers poses a fundamental problem for liberals. While from the perspective of the economic welfare of natives, the optimal policy would be to admit these aliens as guest workers, this policy would violate liberal ideals. These ideals would treat these workers as equals, entitled to access to citizenship and to the full set of public benefits provided to citizens. If the welfare of incumbent residents determines admissions policies, however, and we anticipate the fiscal burden that the immigration of the poor would impose, then our welfare criterion would preclude the admission of relatively unskilled workers ...


Unilateral Refusals To Deal, Vertical Integration, And The Essential Facility Doctrine, Herbert J. Hovenkamp Jul 2008

Unilateral Refusals To Deal, Vertical Integration, And The Essential Facility Doctrine, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

Where it applies, the essential facility doctrine requires a monopolist to share its "essential facility." Since the only qualifying exclusionary practice is the refusal to share the facility itself, the doctrine comes about as close as antitrust ever does to condemning "no fault" monopolization. There is no independent justification for an essential facility doctrine separate and apart from general Section 2 doctrine governing the vertically integrated monopolist's refusal to deal. In its Trinko decision the Supreme Court placed that doctrine about where it should be. The Court did not categorically reject all unilateral refusal to deal claims, but it ...


Hotspots In A Cold War: The Naacp's Postwar Workplace Constitutionalism, 1948-1964, Sophia Z. Lee Jul 2008

Hotspots In A Cold War: The Naacp's Postwar Workplace Constitutionalism, 1948-1964, Sophia Z. Lee

Faculty Scholarship at Penn Law

No abstract provided.


Rethinking Broadband Internet Access, Daniel F. Spulber, Christopher S. Yoo Jun 2008

Rethinking Broadband Internet Access, Daniel F. Spulber, Christopher S. Yoo

Faculty Scholarship at Penn Law

The emergence of broadband Internet technologies, such as cable modem and digital subscriber line (DSL) systems, has reopened debates over how the Internet should be regulated. Advocates of network neutrality and open access to cable modem systems have proposed extending the regulatory regime developed to govern conventional telephone and narrowband Internet service to broadband. A critical analysis of the rationales traditionally invoked to justify the regulation of telecommunications networks--such as natural monopoly, network economic effects, vertical exclusion, and the dangers of ruinous competition--reveals that those rationales depend on empirical and theoretical preconditions that do not apply to broadband. In addition ...


Invasions Of Conscience And Faked Apologies, Stephanos Bibas Jun 2008

Invasions Of Conscience And Faked Apologies, Stephanos Bibas

Faculty Scholarship at Penn Law

This comment responds to an essay by Jeffrie Murphy, which powerfully notes the limitations and dangers of using remorse and apology as metrics for punishment. But the state is more justified in teaching lessons than Murphy suggests, and retributivism ought to make more room for victim vindication and satisfaction. Gauging sincerity, while difficult, is not impossible. In the end, Murphy offers strong reasons to be cautious. But a humane society ought to be more willing to take chances and, having punished, to forgive. The essay by Jeffrie Murphy to which this comment responds, as well as other authors' comments on ...


The Antitrust Standard For Unlawful Exclusionary Conduct, Herbert J. Hovenkamp Jun 2008

The Antitrust Standard For Unlawful Exclusionary Conduct, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

This essay considers the general definition of unlawful exclusionary practices under Section 2 of the Sherman Act as acts that: (1) are reasonably capable of creating, enlarging or prolonging monopoly power by impairing the opportunities of rivals; and (2) that either (2a) do not benefit consumers at all, or (2b) are unnecessary for the particular consumer benefits claimed for them, or (2c) produce harms disproportionate to any resulting benefits. An important purpose of this progression of queries is to permit the court to avoid balancing, although balancing certainly cannot be avoided in some close cases. The given definition is very ...


Happiness Research And Cost-Benefit Analysis, Matthew D. Adler, Eric Posner Jun 2008

Happiness Research And Cost-Benefit Analysis, Matthew D. Adler, Eric Posner

Faculty Scholarship at Penn Law

A growing body of research on happiness or subjective well-being shows, among other things, that people adapt to many injuries more rapidly than is commonly thought, fail to predict the degree of adaptation and hence overestimate the impact of those injuries on their well-being, and, similarly, enjoy small or moderate rather than significant changes in well-being in response to significant changes in income. Some researchers believe that these findings pose a challenge to cost-benefit analysis, and argue that project evaluation decision-procedures based on economic premises should be replaced with procedures that directly maximize subjective well-being. This view turns out to ...


James Wilson And The Drafting Of The Constitution, William Ewald Jun 2008

James Wilson And The Drafting Of The Constitution, William Ewald

Faculty Scholarship at Penn Law

No abstract provided.


Business Taxes And International Competitiveness, Michael S. Knoll May 2008

Business Taxes And International Competitiveness, Michael S. Knoll

Faculty Scholarship at Penn Law

Around the world, policymakers are obsessed with the competitiveness of their domestic companies and domestically based multinational corporations (MNCs). Such concerns frequently influence policy, especially tax policy. In this paper, I develop a theory of how taxes affect the international competitiveness of businesses. I then use that theory to evaluate basic tax policy decisions, such as the choice between residence- and source-based taxation and the level of tax rates, and to understand the impact various provisions in the U.S. Internal Revenue Code are likely to have on the competitiveness of U.S.-based corporations and MNCs.


The Discriminating Mind: Define It, Prove It, Amy L. Wax May 2008

The Discriminating Mind: Define It, Prove It, Amy L. Wax

Faculty Scholarship at Penn Law

Differential group achievements in competitive spheres like business, government, and academia, in conjunction with professed organizational commitments to fairness and equal opportunity, fuel claims that unconscious discrimination operates widely in society today. But attempts to blame disparities by race or sex on inadvertent bias must be approached with caution in the current climate. Many allegations concerning unconscious discrimination do not properly allege category-based treatment at all but rather target the disparate impact, or differential effects, of category-neutral criteria. Such impacts often reflect welldocumented “supply side” disparities between groups in human capital development, qualifications, and behavior. These patterns are not most ...


Agency Costs, Charitable Trusts, And Corporate Control: Evidence From Hershey's Kiss-Off, Jonathan Klick, Robert H. Sitkoff May 2008

Agency Costs, Charitable Trusts, And Corporate Control: Evidence From Hershey's Kiss-Off, Jonathan Klick, Robert H. Sitkoff

Faculty Scholarship at Penn Law

In July 2002 the trustees of the Milton Hershey School Trust announced a plan to diversify the Trust’s investment portfolio by selling the Trust’s controlling interest in the Hershey Company. The Company’s stock jumped from $62.50 to $78.30 on news of the proposed sale. But the Pennsylvania Attorney General, who was then running for governor, opposed the sale on the ground that it would harm the local community. Shortly after the Attorney General obtained a preliminary injunction, the trustees abandoned the sale and the Company’s stock dropped to $65.00. Using standard event study ...


Against Financial Literacy Education, Lauren E. Willis Mar 2008

Against Financial Literacy Education, Lauren E. Willis

Faculty Scholarship at Penn Law

The dominant model of regulation in the United States for consumer credit, insurance, and investment products is disclosure and unfettered choice. As these products have become increasingly complex, consumers’ inability to understand them has become increasingly apparent, and the consequences of this inability more dire. In response, policymakers have embraced financial literacy education as a necessary corollary to the disclosure model of regulation. This education is widely believed to turn consumers into “responsible” and “empowered” market players, motivated and competent to make financial decisions that increase their own welfare. The vision is of educated consumers handling their own credit, insurance ...


Introducing A "Different Lives" Approach To The Valuation Of Health And Well-Being, Matthew D. Adler, Paul Dolan Mar 2008

Introducing A "Different Lives" Approach To The Valuation Of Health And Well-Being, Matthew D. Adler, Paul Dolan

Faculty Scholarship at Penn Law

We introduce a new “different lives” survey format, which asks respondents to rank hypothetical lives described in terms of longevity, health, happiness, income, and other elements of the quality of life. In this short paper, we show that the format is of policy relevance whether a mental state, preference satisfaction or extra-welfarist account of well-being is adopted and discuss some of the advantages the format has over standard formats, such as contingent valuation surveys and QALY-type methods. An exploratory survey indicates that the format is feasible and that health and happiness might be more important than income and life expectancy.


Miscalculating Welfare, Michael B. Dorff, Kimberly Kessler Ferzan Mar 2008

Miscalculating Welfare, Michael B. Dorff, Kimberly Kessler Ferzan

Faculty Scholarship at Penn Law

In their quest to maximize efficiency, law and economics scholars often produce novel, creative, and counterintuitive legal rules. Indeed, legal economists have argued for baby selling, against anti-discrimination laws in the workplace, and for insider trading. In this essay, we discuss some concerns about this form of legal scholarship that privileges the creative and counterintuitive over the fair, mundane, and intuitive. Drawing on a range of empirical evidence, this essay argues that the failure to include, and to give sufficient weight to, fairness preferences undermines legal economists' policy recommendations. Specifically, after setting forth three examples of this phenomenon, in the ...


Hate Speech, C. Edwin Baker Mar 2008

Hate Speech, C. Edwin Baker

Faculty Scholarship at Penn Law

This paper describes the rationale that a full protection theory of free speech, a theory based on respect for individual autonomy, would give for protecting hate speech. The paper then notes that such a rationale will be unpersuasive to many (including this author) if the harms associated with a failure to outlaw hate speech are as great as often suggested – most dramatically, if the failure to prohibit makes a substantial contribution to the occurrence of serious racial/ethnic violence or genocide. The article then attempts to outline what empirical evidence would be needed to support this conclusion and gives reasons ...


Bounded Rationality And Legal Scholarship, Matthew D. Adler Feb 2008

Bounded Rationality And Legal Scholarship, Matthew D. Adler

Faculty Scholarship at Penn Law

Decision theory seems to offer a very attractive normative framework for individual and social choice under uncertainty. The decisionmaker should think of her choice situation, at any given moment, in terms of a set of possible outcomes, that is, specifications of the possible consequences of choice, described in light of the decisionmaker’s goals; a set of possible actions; and a "state set" consisting of possible prior "states of the world." It is this framework for choice which provides the foundation for expected utility theory, as demonstrated in the work of Leonard Savage. Problems arise, however, when the decisionmaker is ...


The Argentine Financial Crisis: State Liability Under Bits And The Legitimacy Of The Icsid System, William W. Burke-White Jan 2008

The Argentine Financial Crisis: State Liability Under Bits And The Legitimacy Of The Icsid System, William W. Burke-White

Faculty Scholarship at Penn Law

This essay examines the jurisprudence of the International Center for the Settlement of Investment Disputes (ICSID) arbitral tribunals in a series of cases brought against the Republic of Argentina in the wake of the 2001-2002 Argentine financial collapse. The essay considers the ICSID tribunals' treatment of non-precluded measures provisions in Argentina's bilateral investment treaties (BITs) and the customary law defense of necessity and argues that the ICSID tribunals have sought to radically narrow the opportunities available to states to craft policy responses to emergency situations while strengthening investor protections beyond the intent of the states parties to the BITs ...